Meeting of the members of the Association. Other meetings of the Board of Directors shall be held at such times and places as may be fixed by the Chairman of the Board of Directors from time to time.

5. Special meetings of the Board of Directors may be called by order of the President or the Chairman of the Board, and shall be called either upon the written request of ten members of the Board or upon the written request of any twenty-five members of the Association in good standing, such requests to be filed with the Secretary.

6. Notice in writing of the time, place and purpose of each meeting of the Board of Directors shall be delivered personally or by mail to each Director at least three days prior to the time of holding such meeting, such notice, if by mail, to be addressed to each Director at his last known post office address as the same shall appear on the records of the Association. No business shall be transacted at a special meeting of the Board other than that set forth in the notice thereof. 7. Meetings of the Board of Directors may be held at any place, within or without the State of New York, designated in the notice of meeting. Any action required or permitted to be taken by the Board or any committee thereof may be taken without a meeting if all members of the Board or the committee consent in writing to the adoption of a resolution authorizing the action.

8. At any meeting of the Board of Directors a quorum for the transaction of business shall be at least five (5) members plus an additional member for every ten members (or fraction thereof) in excess of fifteen. The act of a majority of those voting shall be the act of the Board of Directors, provided that there is a quorum.

9. Any one or more members of the Board or any committee thereof may participate in a meeting of such Board or Committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Such participation shall constitute presence in person within the meaning of the By-Laws.

10. Any Director may be removed for cause by the affirmative vote of two thirds of the full membership of the Board or by a majority vote of the members of the Association.

ARTICLE VII-EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS

1. There shall be an Executive Committee of the Board of Directors, selected from among its members and hereinafter called the Executive Committee, which Committee shall function in conformity with these By-Laws and subject to any governing policy established by the Board of Directors. Such Committee may exercise any of the powers of the Board when the Board is not in session, except those specifically reserved to the Board or to the members by these By-Laws or the New York Not-For-Profit Corporation Law.

2. The Executive Committee shall be composed of the Chairman of the Board, the Chairman of the Executive Committee, the President, the Treasurer, and seventeen other members of the Board of Directors, each of whom shall be elected by the Board of Directors at its meeting following the annual meeting of the Association.

3. The Executive Committee shall meet monthly at least ten times a year, at any place, within or without the State of New York designated in the notice of meeting. In the absence of the Chairman of the Executive Committee, the Chairman of the Board or the President shall act as temporary Chairman.

4. The members of the Executive Committee shall not exceed twenty-one (21) and shall hold office at the pleasure of the Board or until their successors are elected. Seven members shall constitute a quorum of the Executive Committee, and a majority vote thereof shall be necessary for decisions. In the event that any vacancy shall occur in the Executive Committee either by death, resignation or inability to act of any member thereof, or otherwise, such vacancy may be filled by majority vote at any regular or special meeting of the Board of Directors.

ARTICLE VIII-OFFICERS

1. The Corporate officers of the Association shall consist of the following, who shall be elected annually by the Board of Directors at their first meeting following the annual meeting of members: The Chairman of the Board of Directors, and as many Vice Chairman as the Board may from time to time determine; Chair

man of the Executive Committee; the President; the Executive Vice President, if any; the Treasurer; the Secretary; and the General Counsel. The Executive Vice President, Secretary, and General Counsel shall be elected only after consideration of the recommendations of the President.

2. Subject to the preceding paragraph, at every annual election candidates for all elective offices to be filled by the Association shall be placed in nomination by a Nominating Committee to be appointed by the Board of Directors, and other nominations for such offices may be made by any Director. A plurality of the votes of the Directors present shall elect each officer.

3. All corporate officers shall serve until their successors are elected, subject to the provisions of Section 5 hereof. If any office shall become vacant through death, removal, resignation, or disability, the vacancy shall be filled for the unexpired term by appointment made thereto by the Executive Committee.

4. Additional functional, regional or other operational or staff officers may be appointed by the President for such purposes and with such duties and powers as he may designate, except that such appointees shall not be corporate officers or exercise any power as such. They shall hold office at the discretion of the President.

5. Any corporate officer may be removed, either with or without cause, at any regular or special meeting of the Board of Directors, provided that not less than two thirds of the Directors of the Association present at such meeting vote in favor of this removal. The notice of such meeting, however, shall contain information that this item of business will be upon that meeting's agenda.

ARTICLE IX-DUTIES OF OFFICERS

1. The Chairman of the Board of Directors: The Chairman shall preside over meetings of the Board of Directors and shall serve as the Board's representative in consulting with and advising the President concerning the understanding and effectuation of policies formulated by the Board.

2. Chairman of Executive Committee: The Chairman shall preside over meetings of the Executive Committee and shall serve as the Executive Committee's representative in consulting with and advising the President concerning the understanding and effectuation of policies formulated by the Executive Committee.

3. President: The President shall be the full time chief executive officer of the Association and shall be primarily responsible for the planning, managing and administration of the Association's affairs and operations, consistent with policies formulated by the Board of Directors. In addition to the duties incident to the office, the President may exercise such other powers as may be conferred by the Board of Directors not inconsistent with these By-Laws, the certificate of incorporation or applicable statutes.

The President shall define the duties of the staff, supervise their performance, establish their titles and delegate those responsibilities of management that shall be in the best interest of the Association, subject to annual review of the Board of the overall organization structure. The President shall employ and may terminate the employment of members of the staff, other than elected officers, as required to carry on the work of the Association.

The President shall be an ex-officio member of all committees. The compensation and terms of employment of the President shall be fixed by the Board. The compensation and terms of employment of all other officers and employees of the Association shall be fixed by the President, subject to the approval of the Board. 4. Executive Vice President: The Executive Vice President shall serve as the general deputy to the President. In the event of the unavailability or disability of the President the Executive Vice President shall exercise the powers and authority of the President, unless the Executive Committee shall otherwise direct. 5. Treasurer: The Treasurer shall have general charge of all moneys received by the Association and shall be responsible for the deposit of its funds in the name of the Association in such bank or banks as may be approved. The Treasurer shall be ex-officio a member of the Budget, Finance and Organization Committee, and shall report to the Board of Directors and the Executive Committee on fiscal and budgetary matters.

The Treasurer, with the concurrence of the Board, may delegate specific parts of his duties and powers to any appropriate officer of the Association.

The Treasurer shall have overall responsibility for the disbursements of the funds of the Association within the limits established by the approved budget.

The Treasurer shall have no right, nor shall any director, or officer of the Association have the right, to borrow funds of the firm, association or other entity' in which one or more of its directors or officers are directors or officers or hold a substantial financial interest.

6. Secretary. The Secretary shall have general charge of the records of the Association, shall attend meetings of the Association, the Board and the Executive Committee, and shall keep the Minutes thereof.

The Secretary, with the concurrence of the Board, may delegate specific parts of his duties and powers to any appropriate officer or employee of the Association. 7. General Counsel: The General Counsel is the legal adviser to the Association. The Office of General Counsel, in addition to providing general legal service to the Association, is responsible for all litigation and amicus activities of the Association, subject to approval of the Board.

8. Vice-Presidents: Any Vice-Presidents or functional, regional or other operational or staff officers shall have such duties and exercise such powers as shall be delegated to them from time to time by the President.

ARTICLE X-STANDING COMMITTEES

The Following Committees, and such other Committees as the Board of Directors may designate from time to time, shall be Standing Committees of the Association. The members thereof shall be appointed, and the respective Chairmen designated, by the Board. Standing Committee Chairmen shall be members of the Board of Directors.

1. Budget, Finance and Organization Committee, consisting of not less than five members. The Committee shall advise the President on the annual budget, general financial operations, administrative and organizational affairs of the Association, and shall prepare recommendations for the Board of Directors.

The Committee shall establish an income and expense budget for each forthcoming year of operation. The Committee may perform such other duties in connection with the Association's finances as the Executive Committee may from time to time determine.

2. Arbitration Practice Committee, consisting of not less than five members. The Committee shall render advisory assistance in connection with any duties assumed by the Association with respect to administering its Rules of Procedure governing arbitrations held in its Tribunals, and shall have such other duties as the Executive Committee may from time to time determine.

3. Arbitration Law Committee, consisting of not less than five members. The Committee shall render advisory legal assistance to the Office of the General Counsel and promulgate amicus guidelines and review amicus applications submitted to the Association; and shall have such other duties as the Executive Committee may from time to time determine.

4. International Arbitration Committee, consisting of not less than five members. The Committee shall render advisory assistance to the Association in connection with international arbitration matters; and shall have such other duties as the Executive Committee may from time to time determine.

ARTICLE XI-AUDIT

The books of account and financial records of the Association shall be audited at least once a year by a Certified Public Accountant, who shall be selected by the Board with the approval of the members of the Association. The books and audit report shall be available for inspection by any member tof the Board of Directors, or by any committee of members appointed for the purpose by the members of the Association present or voting by proxy at any annual meeting or special meeting called for the purpose of appointing such a committee.

ARTICLE XII-AMENDMENTS

1. These By-Laws may be amended by a two-thirds vote of the members present or voting by proxy at any annual or special meeting of the Association. Written notice of any such proposed change shall be sent to the members in writing at least twenty days prior to the meeting at which it is to be voted upon.

2. An amendment may be proposed by the Board on its own initiative, or upon petition of any five members of the Association.

3. Any such proposed amendment shall be accompanied by a report and recommendation by the Board.

CONSTRUCTION CONTRACT DISPUTES: HOW THEY MAY BE RESOLVED UNDER THE CONSTRUCTION INDUSTRY ARBITRATION RULES

CONSTRUCTION CONTRACT DISPUTES

Many builders, contractors, engineers and architects know from painful experience that building contracts sometimes erupt into expensive conflicts.

Specified materials are not always available when needed. Can equal material be substituted for the specified product?

Changes in plans often result in extra charges. What increased charge for 'extras" is payable?

Contractors are sometimes subject to penalty clauses for delay. Who caused the delay?

Estimates of construction costs may prove unrealistic. Added costs are a frequent source of conflict.

Because parties to such disputes want them resolved by persons familiar with their business and because they want a prompt and final decision, they specify arbitration in their contracts. Although the construction industry has used arbitration for many years, a significant improvement in the system has only recently taken place.

PRIOR SYSTEMS OF ARBITRATION

Until 1966 construction industry arbitation cases under the existing American Institute of Architects Conditions were either arbitrated informally by each party selecting their own "arbitrator" and these two "arbitrators" selecting a neutral arbitrator, or they were administered by AAA under its Commercial Rules.

The former system resulted in many complaints because there were no rules and no supervision. Moreover, many cases dragged on and created procedural problems.

On the other hand, the AAA procedures, although well-tested, were not specifically designed for the construction industry. And the arbitrators on the National Panel of the AAA were not always suitable for construction cases.

A joint committee of engineers and architects comprehensively studied the use or arbitration in the industry and concluded that, although it provided a generally effective method for resolving contractual disputes, the procedure could be greatly improved by creating a nationwide uniform system specifically for the construction industry.

In 1965 the joint committee was enlarged to include the following organizations: American Consulting Engineers Council, then the Consulting Engineers Council; American Institute of Architects; Associated General Contractors; Associated Specialty Contractors, Inc., the then Council of Mechanical Specialty Contracting Industries; and National Society of Professional Engineers.

After a year of study, new rules were adopted, known as the Construction Industry Arbitration Rules, to be administered by the American Arbitration Association. These rules are now recommended for use by all the organizations in the industry.

Since that time, four additional national organizations have provided for the use of this arbitration system in their form documents-the American Society of Civil Engineers, the Associated Society of Landscape Architects, The American Subcontractors Association and the Construction Specifications Institute. Thus, there are now nine national construction associations using the construction Industry Arbitration Rules.

THE NATIONAL CONSTRUCTION INDUSTRY ARBITRATION COMMITTEE

In 1966, with the object of creating the best possible on-going arbitration system, the National Construction Industry Arbitration Committee was established with the representatives of the various industry and professional associations.

Regional advisory committees were also established to work with the American Arbitration Association's regional offices to improve the available construction panel, to serve as a conduit for information, and to advise the AAA on administrative problems.

To implement these new rules and to meet anticipated growth in cases, the AAA's National Panel of Construction Arbitrators was enlarged with the addition of construction industry arbitrators nominated by the Regional Committees.

HOW TO ARBITRATE UNDER THE CONSTRUCTION INDUSTRY ARBITRATION BULES Under the Construction Industry Arbitration Rules, arbitration can be provided for in the original contract. This provision is expressed in a future dispute arbitration clause of a contract. A clause reading "Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction thereof" can be used to take advantage of the new procedures.

In the absence of such a clause, parties can bring an existing dispute to arbitration by means of a signed statement in which both parties briefly describe the issue between them and agree to arbitrate under the Construction Rules.

On receiving the Demand for Arbitration or Submission Agreement, the Arbitration Association sends each party a copy of a list of proposed arbitrators technically qualified to resolve the controversy. In a construction dispute, these names may include builders, contractors, engineers, architects, other businessmen familiar with the construction industry, and attorneys who customarily represent such clients. In cases involving lesser sums one arbitrator is generally appointed. But in larger cases, it may be preferable to have three neutral arbitrators.

Parties are allowed seven days to study the list, cross off any names objected to, and number the remaining names in order of their preference. Where parties want more information about a proposed arbitrator, such information is given on request.

When these lists are returned, the American Arbitration Association compares them and appoints the arbitrator whom the parties have approved. Where parties were unable to find a mutual choice on a list, additional lists may be submitted at the request of both parties.

If parties cannot agree upon an arbitrator, the Association will make administrative appointments, but in no case will an arbitrator whose name was crossed out by either party be appointed.

Arbitrators on AAA panels are generally willing to serve without fee. They volunteer an occasional day as a public service. But after spending two days on a case, the arbitrator must be compensated by the parties. The rate of compensation will then be based upon the amount of service involved and on the number of hearings. Any arrangement for the compensation of an arbitrator is made through the AAA, not directly by him with the parties.

After the arbitrator is appointed, the AAA consults with the parties to determine a mutually convenient time and place for the hearing. Arrangements are made through the Association, rather than directly between the arbitrator and the parties. The reason for this is twofold: it relieves the arbitrator of routine burdens and it eliminates the danger that, in the course of conversations outside the hearing room, one party may offer arguments on the merits of the case that the other has not had an opportunity to rebut.

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THE HEARING

Arbitration hearings are less formal than court trials. Arbitrators not required to follow legal rules of evidence. Rather, they are empowered to listen to all evidence that is relevant and material. Arbitrators often accept evidence that might not be permitted in court. But this does not mean that all evidence is believed or given equal weight.

Each party has a right to be represented by counsel, and the hearing is conducted in a businesslike manner. It is customary for the complaining party to proceed first with his case, followed by the respondent. This order may be varied, however, when the arbitrator thinks it advisable. Each party must try to convince the arbitrator of the correctness of his position and the hearing is not closed until each has had a full opportunity to present his case.

THE AWARD

The purpose of the award is to dispose of the controversy finally and conclusively. It must be handed down within thirty days after the close of the hearing. The power of the arbitrator ends with the making of the award; the decision cannot be changed unless both parties agree to reopen the case, unless the applicable law provides for reopening.